Rathbones Group has suspended the take-on of new clients needing enhanced due diligence and has also halted some fresh money from existing higher-risk clients.
The move comes after a Skilled Person Review carried out following contact with the Financial Conduct Authority.
The review pointed to weaknesses in the firm’s UK wealth management arm in how Consumer Duty has been put into practice and embedded, along with parts of its compliance, oversight and assurance framework.
To address the issue, Rathbones said it will run a two-year plan to deal with the review’s recommendations. It will also carry out a focused check on part of its client base to determine whether those clients received good outcomes.
For a period of up to 12 months, the group said it would impose “a voluntary pause to the onboarding of new clients that require Enhanced Due Diligence (“EDD clients”) whilst the Group focuses on implementing changes to its procedures and controls”.
Over the past year, relevant gross inflows from EDD clients were about £370m ($496.6m).
The company is also introducing “a voluntary pause to the acceptance of inflows into general investment accounts from some existing EDD clients”.
Rathbones said it would work with those clients so they can meet certain requirements and restart inflows as soon as practicable.
The step applies to about 4,700 clients, equal to 4% of the group’s 119,000 clients.
Over the past 12 months, relevant gross inflows from those clients were about £530m.
Rathbones expects these measures to lead to costs of about £60m, after expected insurance recoveries, with those charges to be recorded as non-underlying expenses across the next two years.
The group noted its dividend policy is unchanged.
It also said the previously announced £20 million share buyback, which has now received PRA approval, will begin shortly.
In a separate move, Rathbones is examining parts of its pricing as part of its work on fair value for clients.
For now, it plans to stop levying investment management fees on cash balances in clients’ discretionary portfolios from 1 July. It said this is expected to lower underlying profit before tax by about £9m in 2026.
Rathbones CEO Jonathan Sorrell, who took over the position last year, said:
“We are committed to operating to the highest standards on behalf of our clients. The work we are undertaking will support and accelerate our vision to be the best wealth manager in the UK, by far. Our strategy is unchanged and we continue to make strong progress against the plan set out in February. I am grateful for the constructive engagement with the FCA, and the continued trust of our clients as we implement these improvements.”
“Rathbones pauses new high-risk client onboarding ” was originally created and published by Private Banker International, a GlobalData owned brand.
